Mathematical thought

[Fern]

The irking thing is this actually does sound like a good plan.....one i would like to be able to get behind.

But.....what deductions/exemptions/credits?

When romney says in a debate "let's pretend you can only have x $ of deductions" and obviously is making that number up on the spot.....I have a hard time believing he has a real plan in terms of a list of the various deductions that would be cut or eliminated. It would be nice if it was true, though.

That will be a difficult problem. Too many Congresspersons with too many constituents invested in various deductions/credits/exemptions. But it has been done before, most notably under Reagan.

Romney should not be promoting any specifics as to reductions/limitations in deductions etc. For one thing, he's not going to have much say in it, that's Congress's football to kick around. For another, if he did the whole issue becomes a referendum on the individual reductions/eliminations he identifies. That would be enormously counter-productive.

The tax code is mighty complicated, with a large number of deductions, credits and exemptions available for cutting. The number of possibilities of various combinations is almost unlimited. From what I've seen Romney is saying they are all on table, so Congress has all the leeway possible to sort it out. Will they be able to get it done? IMO, that is the real question, and I've seen nothing to suggest they can.

Almost everyone in the tax profession, the business community and tax staff on both sides of the aisle in Washington DC want something along the lines Romney has proposed -a broad flatter tax system with out-dated deductions etc eliminated. To my knowledge not many serious people are suggesting anything but a revenue neutral overhaul, but this discussion has been ongoing now for several years with apparently no real success.

Fern

 

[Apple Of Sodom]

I may not be as successful as you financially, but at least I'm not a judgmental cock to people who have a different set of circumstances than myself.

Isn't calling me judgmental cock a judgement?

I am not incredibly wealthy. I do pretty good, but I'm not yacht in the Riviera and Ferrari in the driveway wealthy, as most people think those making good money are.

At any rate, you sound a little jealous, and that is sad. The fact that you think the difference between me and you is merely circumstance is disheartening. People that think that don't do well. They believe too much is left to chance and that they just aren't lucky enough to make decent money. That is fine, because where you see bad luck I see new opportunity. I would personally like to thank you for not being as successful as you would like to be because it leaves room for the rest of us who don't mind bleeding and sacrificing and risking everything they have for a shot at wealth.

I'm still wondering though...how much of my money, and not a percentage, should I pay in taxes? Let's say I make $500K this year. What dollar amount do you think is fair for me to send to the government and why?

 

[Screech]

That will be a difficult problem. Too many Congresspersons with too many constituents invested in various deductions/credits/exemptions. But it has been done before, most notably under Reagan.

Romney should not be promoting any specifics as to reductions/limitations in deductions etc. For one thing, he's not going to have much say in it, that's Congress's football to kick around. For another, if he did the whole issue becomes a referendum on the individual reductions/eliminations he identifies. That would be enormously counter-productive.

The tax code is mighty complicated, with a large number of deductions, credits and exemptions available for cutting. The number of possibilities of various combinations is almost unlimited. From what I've seen Romney is saying they are all on table, so Congress has all the leeway possible to sort it out. Will they be able to get it done? IMO, that is the real question, and I've seen nothing to suggest they can.

Almost everyone in the tax profession, the business community and tax staff on both sides of the aisle in Washington DC want something along the lines Romney has proposed -a broad flatter tax system with out-dated deductions etc eliminated. To my knowledge not many serious people are suggesting anything but a revenue neutral overhaul, but this discussion has been ongoing now for several years with apparently no real success.

Fern

Thank you for the good reply. I don't think anything substantial could be done with the current congress but it is an interesting idea.

I can see why a candidate would not want to name specifics -- namely, people are always fans of cutting other people's deductions (after all, its always those "other people" who are lazy and don't deserve their handouts) but keeping their own ("screw you, I need mine!). If congress was forced to try to work something out I think there is a slim (but slightly nonzero) chance something could come of it. But after the last couple years I have a hard time imagining it would amount to anything other than a tax break for the rich.

 

[QuantumPion]

Anyone remember that story from a few years ago about Alpaca farmers? The government was giving a tax deduction to some Alpaca farmers as a political favor, and what happened is Alpacas became a huge tax shelter for rich people. Alpacas were selling for a million dollars because there weren't that many Alpacas around but each one was worth hundreds of thousands of dollars in tax savings and everyone wanted to get their hands on them. So we ended up raising thousands of Alpacas just to use as tax write-offs.

Then there's the electric vehicle tax credit. For a while, the government was giving a $7500 tax credit to anyone who bought an electric vehicle. Turned out golf carts qualified, so a company went in to business making and selling golf carts people would lease just to get the tax write off, and rent them back to the golf course to use.

These are just a few examples of how fucked up our tax system is.

 

[QuantumPion]

found the above story here:

http://www.newsmax.com/Stossel/taxbreaks-alpaca-breeders-agriculture/2010/12/22/id/380713

 

[cybrsage]

"You never go full cybrsage retard"

Never go full amazingly awesome, handsome, strikingly manly, highly intelligent retard?

You lack basic English skills...you sentence is nonsensical. Try again, but without the normal superior level of fail you normally exhibit.

 

[cybrsage]

The Fair Tax will eliminate all the whining about unfairness.

 

[Fern]

The Fair Tax will eliminate all the whining about unfairness.

I think you vastly underestimate the 'creativity' of people.

As long as there is a tax they will find something to whine about.

Fern

 

[IHateMyJob2004]

20% reduction in tax rates for everyone.

That means, if you are taxed at 10%, it's reduced to 8%. If you're taxed at 15%, it's reduced to 12%. If you're taxed at 20%, it's reduced to 16%. If taxed at 25%, it's reduced to 20%. And, if you pay 30%, it would decrease by 6% to 24%.

"Everyone gets their rate cut by 20%" is a clever way of saying, "we're giving a much bigger cut to higher income people."


Or, have I interpreted what was said incorrectly?

You got it right.

 

[Atomic Playboy]

At any rate, you sound a little jealous, and that is sad. The fact that you think the difference between me and you is merely circumstance is disheartening. People that think that don't do well. They believe too much is left to chance and that they just aren't lucky enough to make decent money. That is fine, because where you see bad luck I see new opportunity. I would personally like to thank you for not being as successful as you would like to be because it leaves room for the rest of us who don't mind bleeding and sacrificing and risking everything they have for a shot at wealth.

You misunderstood me. I don't fault you for being a successful buisness owner, nor do I think that only circumstance or fate stands between our respective positions. I do, however, fault you for implying or flat-out saying that if someone is not financially successful, it is because they are not as hard-working, smart or dedicated as you. There is a discrepancy in wages for different types of jobs in this country; we tend to pay investment bankers a lot more than teachers, for example. Does this mean that a successful investor like Warren Buffett is hundreds of thousands of times more important than a successful teacher? No, of course not. That's just how our society has chosen to vaule what he does. But you'll notice in interviews, Warren Buffett doesn't say that people who haven't enjoyed the success he has aren't trying hard enough. Being successful is a great thing, but to feel that you need to diminish the work of others... I just don't get that attitude.

 

[KMFJD]

20% reduction in tax rates for everyone.

That means, if you are taxed at 10%, it's reduced to 8%. If you're taxed at 15%, it's reduced to 12%. If you're taxed at 20%, it's reduced to 16%. If taxed at 25%, it's reduced to 20%. And, if you pay 30%, it would decrease by 6% to 24%.

"Everyone gets their rate cut by 20%" is a clever way of saying, "we're giving a much bigger cut to higher income people."


Or, have I interpreted what was said incorrectly?

Just don't complain about the debt and your golden

 

[Nemesis 1]

Math works the same for CPUs also if comparing 2 brands

 

[Fayd]

Talking about percentages of percentages magnifies the effect, as you well know.

It reminds me of the old quote:
In the fall of 1972 President Nixon announced that the rate of increase of inflation was decreasing. This was the first time a sitting president used the third derivative to advance his case for reelection.

nixon was just ahead of the times. that's standard debate rhetoric now.

 

[DCal430]

You know at first I thought it meant he would subtract 20% from your current rate.

So anyone paying 20% and lower would now pay 0. Those paying 35% would now pay 15%, but this seems like it can't work. Hardly anyone would be paying any taxes.

 

[uclaLabrat]

I have similar feelings toward you. It must be nice to walk away from your job every day and not have to worry about it. It must be nice to know that if you lost your job you don't lose your house, your cars, all of your savings and everything else you put on the line if you own businesses. It must be very nice to have free time.

I am proud to pay my share of taxes. But we need to talk about how much we pay, not percentages of what we pay. I'm not sure why you think *I* should pay more taxes than you just because I've sacrificed more and put more on the line than you were willing to.

You also don't have a shitty boss that takes credit for what you do, exploits your time or the fact you're on salary, or lays you off because he wants to for no good reason, or for many good reasons, or just so he can give some choad a raise.

And yeah, for most of us, if we lose our job, we do lose our house, our cars, and all of our savings.

Sucks to be you man, I'd HATE that gig.

 

[Blackjack200]

I can see why a candidate would not want to name specifics --

I think we can all see that.

 

[Agent11]

Isn't calling me judgmental cock a judgement?

I am not incredibly wealthy. I do pretty good, but I'm not yacht in the Riviera and Ferrari in the driveway wealthy, as most people think those making good money are.

At any rate, you sound a little jealous, and that is sad. The fact that you think the difference between me and you is merely circumstance is disheartening. People that think that don't do well. They believe too much is left to chance and that they just aren't lucky enough to make decent money. That is fine, because where you see bad luck I see new opportunity. I would personally like to thank you for not being as successful as you would like to be because it leaves room for the rest of us who don't mind bleeding and sacrificing and risking everything they have for a shot at wealth.

I'm still wondering though...how much of my money, and not a percentage, should I pay in taxes? Let's say I make $500K this year. What dollar amount do you think is fair for me to send to the government and why?

After WW1 the top rate was 77%, to help pay for the war. During WW2 you would have been taxed at 94% and that rate did not decrease much after the war was over, it stayed over 90 % until 1964 when it was lowered to 77%, and it slowly decreased over time.

We are at war but we do not have a draft because it is political suicide.

We are at war but we cannot raise taxes because the Republicans refuse to raise taxes. Even though they are screaming bloody murder about debt and deficits, and even though they are the ones that got us into these wars to begin with.

I should be drafted and you should be taxed somewhere from 77% to 94%. So $385,000 to $470,000 less deductions. Assuming that $500,000 was all taxable.

And the Republicans should STFU.

 

[dank69]

If I correctly understood Romney in debates, you're completely missing the point (Or, only getting half of it, which isn't accurate at all in taxation.)

Viz:

1. He intends to keep the % of tax paid by the various groups exactly the same.

2. He intends the tax plan to be revenue neutral.

3. To achieve #2 deductions/exemptions/credits must reduced or eliminated. (I don't understand how the Democrats get away with claiming this is mathematically impossible, it is not. The total deductions/credits/exemptions are well in excess of the amount that need to be reduced/eliminated, so it's not "mathematically impossible". However, it will require a substantial elimination/reduction, whether that is 'politically impossible' is a fair question.)

If the parameters are achieved there is no tax cut favoring
the rich, they will still have the same tax burden and it will be revenue neutral.

The part you are overlooking or forgetting is that the reduction/elimination of deductions etc. is much costly for the rich. Yes, the math means a 20% cut works out to a larger rate cut for the rich, but at the same time the same math means loss of deductions etc is more costly for the rich. This is how it balances out.

Fern

With respect to #3, I think the claim is that it is mathematically impossible to acheive revenue neutrality without closing the mortgage deduction loophole which would hurt the middle class more than it would hurt the rich. I believe the claim comes from the Tax policy Center, not the Democrats.

ON TOP OF THAT, even if he could keep tax policy revenue neutral to the point that nobody sees a change in their effective tax rates, he is still left with the problem of fixing the deficit. He won't be generating new tax revenue, he is adding $2T in defense spending, he is lowering tax revenue by an additional $1T by making the Bush Tax Cuts permanent. How is he going to account for that additional $3T on top of our current deficit? THAT is what Democrats are saying is mathematically impossible. No amount of conservatively biased studies with preposterous projected GDP growth can counter that in reality.

 

[DrPizza]

noise, noise, noise

Then I read this reply:

If employees at a company are asked to take an equal pay cut so some won't have to be laid off, would you suggest that everyone take a 10% pay cut, or everyone take $10K less?

Or, the real estate tax on my commercial building goes up by $5,000 and rent must be increased to pay for it. How shall the additional cost be allocated? The units are as follows:

- Tenant A has a 10,000 sq ft unit

- Tenant B, C, D, E have 1,000 sq ft units.

Should each pay $1,000 more? Or should it be prorated, i.e., based on %'s?

Your definition of "equal" leads to some mighty questionable results. And this whole thing is caused by different rates for different groups. If everybody paid 20% we could have an unarguably "equal" cut by reducing everyone's rate by 4%.

I'm surprised to see someone actually try to make the argument that a reduction by an equal % isn't equal at all.

Your suggestion increases the progressivity of the system, that seems indefensible in terms of arguing "equal". The suggested % cuts maintain the existing progressivity and that is how you confirm it is "equal".

Fern

I didn't think it through as much as you did. I merely realized, "hey, that's a bigger drop in rates for higher brackets than it is for the lower brackets" and posted without thinking about it any further. I stand corrected - it's fairer; and to be fair, the language had to be chosen to hide it. Or, to put it another way, *now* I see how a drop from 30% to 24%, vs. a drop of 15% to 12% is fair. But, I realize that the average person might not agree - hence the language of how the rates will be dropped.

I stand corrected.

 

[Fern]

With respect to #3, I think the claim is that it is mathematically impossible to acheive revenue neutrality without closing the mortgage deduction loophole which would hurt the middle class more than it would hurt the rich. I believe the claim comes from the Tax policy Center, not the Democrats.

I'm not familiar with that. I have heard that we have deductions etc. that are worth about $1.3 trillion per year. IIRC, we would need cut that by about $500 billion per years to achieve revenue neutrality. I would expect the $1.3T amount to be fluid and change depending upon the amount income claimed on tax returns each year. In 'down' years it would be lower because deduction etc are worth less with lower income, and vice-versa in 'good' years.

ON TOP OF THAT, even if he could keep tax policy revenue neutral to the point that nobody sees a change in their effective tax rates, he is still left with the problem of fixing the deficit. He won't be generating new tax revenue, he is adding $2T in defense spending, he is lowering tax revenue by an additional $1T by making the Bush Tax Cuts permanent. How is he going to account for that additional $3T on top of our current deficit? THAT is what Democrats are saying is mathematically impossible. No amount of conservatively biased studies with preposterous projected GDP growth can counter that in reality.

I'm not sure of your info.

But if I'm following you the $2T in defense spending means an additional $200 billion a year. (Is that over-and-above the usual baseline increase?)

The Bush tax cuts are worth only $38 billion according to the most recent CBO estimate I've seen (cuts for the "rich", no one is calling for rolling back all the cuts). I don't know where Obama and the Dems are getting the $100 billion amount, unless they are using the earlier CBO estimate that was performed when the economy was high flying (back in '07 IIRC). But I don't know why they would use that old number when better/newer data is available..

IIRC, the GDP growth in his plan is 5%. Basically, that's 3% more than we have now. (Well, sort of. Our GDP growth has softened the last 2 quarters). Now we may not achieve 5%, but I don't think it can reasonably be called "preposterous". Usually, coming out of a recession we experience higher than normal GDP growth for a period. My question is how long does his plan for the 5% to be maintained.

So, I'm not sure it's "mathematically impossible". However, I would say it's closer to being 'politically impossible' given the current climate in Washington DC.

No matter who wins the Presidency, we're facing some fiscal/budgetary shizz pretty soon.

Fern

 

[dank69]

I'm not familiar with that. I have heard that we have deductions etc. that are worth about $1.3 trillion per year. IIRC, we would need cut that by about $500 billion per years to achieve revenue neutrality. I would expect the $1.3T amount to be fluid and change depending upon the amount income claimed on tax returns each year. In 'down' years it would be lower because deduction etc are worth less with lower income, and vice-versa in 'good' years.

Correct, he would have to cut deductions by $480B/year. The Tax Policy Center can explain it.

I'm not sure of your info.

But if I'm following you the $2T in defense spending means an additional $200 billion a year. (Is that over-and-above the usual baseline increase?)

Yes.

The Bush tax cuts are worth only $38 billion according to the most recent CBO estimate I've seen (cuts for the "rich", no one is calling for rolling back all the cuts). I don't know where Obama and the Dems are getting the $100 billion amount, unless they are using the earlier CBO estimate that was performed when the economy was high flying (back in '07 IIRC). But I don't know why they would use that old number when better/newer data is available..

I think the number is all of the tax cuts, not just on the rich. While Obama does want to make the tax cuts permanent for all but the top (I don't agree with this btw, I think they should all expire at some point), the point is that Romney want to cut taxes by 20% on top of all the existing tax cuts. The current tax cuts are adding to the deficit. Romney doesn't get to ignore this fact just because he didn't put them in place.

IIRC, the GDP growth in his plan is 5%. Basically, that's 3% more than we have now. (Well, sort of. Our GDP growth has softened the last 2 quarters). Now we may not achieve 5%, but I don't think it can reasonably be called "preposterous". Usually, coming out of a recession we experience higher than normal GDP growth for a period. My question is how long does his plan for the 5% to be maintained.

It is preposterous. The Bush Tax Cuts were projected to have less of an impact on growth. That didn't happen. Now these biased reports are claiming that even more tax cuts will lead to even more growth. This is the definition of insanity.

So, I'm not sure it's "mathematically impossible". However, I would say it's closer to being 'politically impossible' given the current climate in Washington DC.

No matter who wins the Presidency, we're facing some fiscal/budgetary shizz pretty soon.

Fern

Agreed. However, Romney's "plan" makes thing demonstrably worse in a very tangible way. These are facts that cannot be argued. You think $1T deficits are bad? Romney will make them look good. That or he will not deliver on a single point of his 5 point plan and will do exactly the same thing Obama has done. The same things you and other Republicans attack him for. Those are your only two possible outcomes. Pick one.